Is Higher Ed a H.M.O’s Biggest Fan ?

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On the Times Economix blog, Uwe E. Reinhardt suggests that higher education and heath care might have similarities that inform the health care debate. Reinhardt was on a panel of policy experts during the 1980’s that made recommendations on how Congress should pay physicians who handled Medicare patients. He notes that doctors felt that the H.M.O model did not compensate physicians appropriately for their services.

He then moves on to dissect the doctors’ argument by looking at other goods the public deems vital, specifically education, and asks how those goods would look if they were provided in the same way as heath care.

He writes:

Correctly viewed, a modern university is a prepaid, staff-model, pedagogic group practice – the educational analogue of a staff-model health maintenance organization, or H.M.O., like the Kaiser Permanente Health Plan.

Like H.M.O.’s, which are prepaid an annual capitation for all of an insured person’s medically needed services, universities are prepaid one annual tuition fee for all the pedagogic services going into the education of the student.

But suppose universities operated instead on a piece-rate compensation basis, like the current health system. They would then be merely a pastiche of different pedagogic profit centers, each with its own fee schedules and ownership patterns.

What he describes is not a particular reassuring backdrop to figuring out how to pay for college and although his post does not solve the health care debate, I think that when we apply the same reasoning to higher education that is currently applied to heath care we see how unreasonable it is to argue that we should not reform the way doctors and hospitals currently do business.